Last week, I gave an introduction to this series of articles called Rethinking Referrals (to read the article, click here). This week, I will begin to explain why we should rethink referrals.
One of my favorite singing groups of all time (and the best technical singers ever in my opinion) is Boyz II Men. One of their hit songs back in 1994 was “Water Runs Dry.” While they were referring to a love relationship, I want to apply this phrase to marketing.
Most companies don’t fail or struggle because of a lack of service or product. They struggle because of a lack of sales. Their “water runs dry” so to say. In this article, I want to discuss the first reason why we should rethink the way we view referrals.
If you are primarily relying on referrals in your business, then chances are you are either failing or struggling. I know, I know. There are those people out there who live by referrals and die by referrals. They have made their business predominantly by referrals. I won’t deny that this sometimes can happen. But I believe this is the exception to the rule and usually doesn’t happen.
If you have somehow managed to thrive by relying only (or mostly) on referrals, then consider yourself in the minority. However, if you are like the majority of salespeople and you realize that you need more than referrals, then please read on. So, what is the first “negative” or “problem” with referrals?
Referrals are limited in number. What happens when the water runs dry and you no longer have referrals? Once you have gone through your list of family and friends and their family and friends, then what?
You could always join a referral group, but you will still run into the same problem. This is why referral groups tend to be very transit in nature. In fact, a referral group I was once a part of had only a 20% renewal rate for membership from year to year. This means that 80% of people in the group realized after one year that they didn’t have the number of referrals they needed for it to be worth their while to be a part of the group.
Referrals are limited in quality. While everybody I know may also know 600 people, the chances of many (or any) of those 600 people being a quality referral are not very high. When I use the word “quality,” I am not speaking in terms of the worth of the individual; but rather, is the person an actual "referral” for my business, product, and my business qualifications?
Just because someone knows me doesn’t mean they need my services. Just because somebody knows me and needs my services doesn’t mean they will be able to use me. Just because somebody knows me, needs my services, and is able to use me doesn’t mean they will want to use me. Just because somebody knows me, needs my services, is able to use me, and wants to use me still doesn’t necessarily mean I want them as a client. See how the cycle works? Sometimes, you may even find yourself wasting time (and money) by dealing with unqualified referrals.
Referrals are limited in their consistency. Today you may have a referral, and tomorrow you may not. There is no consistency when you are (predominantly) relying on referrals as your “business plan.”
There are no objective calculations, data, or gauges to be able to create consistency when relying on referrals. Once again, I want to qualify here. I am speaking in regards to those who predominantly rely on referrals as a business plan.
So, in conclusion, don't let "the water run dry" in your business. The first reason why I think we should reconsider the way we view referrals is because they are limited in nature. Next week, I will continue by dealing with another (and perhaps the main) “problem” with referrals.
- Kevin Pendergrass
www.pendergrasspromos.com
kevin@pendergrasspromos.com